c corp bk

Corporate
Record Book

Corporate Record Book

Set up a Corporate Record Book. This should be kept updated at all times. Documents can be kept in a notebook binder, or in file folders. The Corporate Record Book should include the following documents:

1. the original certified (by the California Secretary of State) copy of Articles of Incorporation and the original copy of any and all changes made thereafter

2. the original Bylaws and a copy of all changes made thereafter

3. the Advance Ruling Letter and the Letter of Determination from IRS and letter from Secretary of State approving your application.

4. copy of “Statement by Domestic Nonprofit Corporation” sent to the Secretary of State every other year (lists the current officers and their addresses) $20 filing fee every other year

5. copy of the RRF-1 sent to the Charitible Trust each year (no filing fee unless gross receipts are $100,000 or more). Click here for more info

6. copy of the Secretary's Minutes from the Annual Meeting for each year

7. copies of all income tax returns (no filing fees)

8. copy of Financial Record/ Balance Sheet for each fiscal year of operation

Not all documents are required to be kept, but it would be wise to include some or all of the following:

1. Copy of the Association Liability Insurance Policy

2. Copy of all contracts signed by anyone in the name of the association.

3. Copy of any applications for credit billing.

4. Copy of sales tax form sent to the Board of Equalization (if applicable)

5. Copy of Raffle Registration filed every August (due September 1 each year)

6. Copy of Raffle Reports filed after each raffle is held

7. If an attorney is hired for any reason, keep copy of all documents related to the issue and records of attorney information.

File income tax returns EVERY year

Tax-exempt means that you do not have to pay income taxes for your non-profit association, but the organization is still required to file income tax returns. It costs nothing to fill out the forms and mail them in. This means both
> FTB Form 199 California Exempt Organization Annual Information Return from California, and
> IRS Form 990 Return of Organization Exempt From Income Tax. (You may be able to file the IRS Form 990 EZ Short Form.)

Make a copy of the tax returns and keep it in your Corporate Records Book

If gross receipts are under $25,000, a non-profit needs to file every 10 years. If the income tax returns are not filed in that 10th year, your nonprofit status can be lost, on both the State and Federal level. In 10 years, officers change, the mailing address for the association has usually changed, new board members are not aware of the requirement of filing every 10 years and the old board will not remember to tell new members, etc. There is no filing fee, so it is better to get in the habit of filing every year.

If gross receipts are $25,000 or more and an income tax return was not filed, you will be required to file a return for that fiscal year, and there will be penalties and fines, with interest, for not filing. If there are 1 or more years in between the year that your receipts totaled $25,000 or more, you will have to file tax returns for each of those years, and possibly pay penalties and fines for those years as well. IRS will have you average the last 3 years gross receipts, and it may be possible that there would not be any penalties for not filing, if the 3 years average under $25,000.

When you change your bylaws, you must include this change in your tax return for both State and Federal returns. You have changed your “organizing or governing documents” and this must be noted.

On the 1999 IRS Form 990-EZ, Part V, line 34, and on the 1999 FTB Form 199, line 15, it asks this question. If the answer is yes, a copy of the change must be filed with your income tax returns.

Changing the Articles of Incorporation and the Bylaws

If your association is a member association, your members must approve any changes to the Articles of Incorporation and to the Bylaws. Members must be notified, in writing, 30 days in advance of the meeting. The correct method would be to write out the section to be changed and directly below this, write out the section with the change. This allows the member to see both the old and the proposed new version.

At the meeting, a formal motion must be made and seconded, and after discussion, receive a majority approval when the vote is called.

2. Articles of Incorporation. After receiving approval from the members at the meeting, you must file this change with the Secretary of State first (for a fee). It is wise to send in a minimum of 3 copies to the Secretary.

If the Secretary of State approves the change, they will keep one copy and send back the other 2 copies with their stamp of approval on both.

File one of the certified copies in your Corporate Book. If you choose, the Secretary can have one certified copy to keep with the minutes (if so, make an extra copy to send to the Secretary of State), but just a copy of the approved changed Articles of Incorporation is sufficient

You must then file this change with the Internal Revenue Service for approval, including one of the copies of the certified changes.

Then the changes must be recorded on your next tax return.

3. Bylaws. After receiving approval from the members at the meeting, make a minimum of 4 copies.

File one copy in your Corporate Book, and one with the Secretary's Minutes.

Keep the other 2 copies and file them with the income tax returns when it is time to file, checking off the appropriate boxes on each return..

Articles of Incorporation should not be changed if at all possible. The Secretary of State and the IRS have samples of Articles for each type of corporation, and if you follow their guideline, you should not have to make a change. These are much more difficult to change and take more time.

Bylaws should be general in nature, not going into detail, but just giving guidelines for what needs to be done. For example, the Bylaws could state that dues will be collected and the membership year is from May of one year through April of the next year. A Policy could be written to state how much dues will be collected. Since dues can go up often, a simple vote of the members is sufficient and no further filing is necessary.

As a general rule, Articles of Incorporation and Bylaws should be changed as little as possible. They are determined by the California Nonprofit Corporation Code, and when you make a change, that change cannot contradict that Code. IRS does check out the changes and will sometimes contact you regarding the change.